Loans Personal Loans

Prosper Personal Loan Review [2024]: The Original Peer-to-Peer Lender

Prosper, the first peer-to-peer lending marketplace in the U.S., may be a good option for your personal loan needs.

Updated Nov. 12, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Prosper

OUR VIEW

If you need a personal loan and want to go in a different direction than a traditional lending institution, you can try borrowing directly from investors with a peer-to-peer loan from Prosper. This may sound like a more “personal” touch, but the process for qualifying for a loan is virtually identical to any bank loan. A positive, however, is that Prosper may approve loans for applicants — including people with fair credit — who might otherwise not receive funding.

This is because investors decide which loans to approve and may be more inclined to take on riskier applicants for the potential of a higher return. I recommend this lender above others for borrowers with less-than-perfect credit and those who want to apply with a co-applicant. But even if you like Prosper's approach, you should always compare loans with at least a few lenders.

Pros

Lending by peers instead of a banking institution
Available in most states
Lower minimum APRs than many lenders
Joint applications accepted

Cons

Customer ratings are mixed
Late fees, check fees, and high origination fees
High maximum APRs
How we evaluate products

Prosper personal loans at a glance

Loan types Unsecured
Loan amounts $2,000 to $50,000
Annual percentage rate (APR) From 8.99% (as of 07/01/24)
Loan terms 24 to 60 months
Origination fees 1% to 9.99% of your loan amount
Availability All states except for Iowa and West Virginia
Purposes Debt consolidation, home improvement, medical expenses, vehicle purchases, and more

Prosper pioneered peer-to-peer lending in the U.S. in 2005 and has facilitated over $27 billion in loans to more than 1.7 million customers. Its investor-driven model may offer more flexible requirements for borrowers than traditional lending institutions. Instead of going through a bank that may decide not to loan to you if your credit profile indicates too much risk, potential investors decide whether or not to invest in your loan when you apply with Prosper. If approved, they make a return on their investment when you repay your loan.

WebBank, an FDIC-insured industrial bank, provides funding for loans with Prosper and other marketplaces such as LendingClub and Upgrade.

Who is Prosper best for?

If you don’t have the greatest of credit, Prosper could be a smart option. While some lenders require good credit (FICO score of at least 670) or better, Prosper says it “welcomes those with less-than-perfect credit” and looks at other factors besides your credit score. A FICO score of at least 600 gives you the best chance of approval, so Prosper might be right for you if your score is at or above this but you’ve had a hard time getting a loan.

You also might be a strong candidate for a Prosper personal loan if you qualify for a low origination fee and rate. This depends largely on your credit profile, and Prosper will let you check for prequalification to see what rates and fees you might be approved for (note that prequalification doesn’t guarantee approval). Though Prosper is ideal for borrowers who don’t have excellent credit, its maximum APRs and origination fees are high, so we don’t necessarily recommend it for those who get the shortest end of the stick and qualify for the worst of these.

Which loan products does Prosper offer?

Prosper offers personal loans for various purposes, including debt consolidation, vehicle purchases, medical/dental expenses, home improvement, and more.

Personal loans

Prosper’s personal loans are unsecured, which means you don’t have to provide anything of value as collateral when applying. Prosper offers loan amounts ranging from $2,000 to $50,000, with repayment terms from two to five years with a fixed APR as low as 8.99% (as of 07/01/24).

Prosper uses a proprietary system to calculate your “Prosper Rating.” This evaluates the amount of risk associated with an application to help potential investors decide whether or not to fund your loan, and it may allow for more leniency than traditional lenders that solely look at income, debt-to-income ratio (DTI), and credit scores.

You can get a potential loan offer by filling out some basic information on the Prosper website, a process known as prequalification. When you do this, Prosper will run a soft credit check on your TransUnion credit report, which won’t affect your credit score.

Good to know
Many personal loan lenders offer prequalification so you can see whether you might be approved for a loan without impacting your credit. You can prequalify with as many lenders as you want, with only basic information about your financial situation and borrowing needs.

How to qualify

When you formally apply, Prosper will examine your credit profile and financial information to see if you’re eligible for a loan. You might qualify if you meet the following criteria:

  • You have a FICO score of 600 or higher (though some applicants with lower scores may be accepted).
  • You live in a state where Prosper operates.

Prosper does not disclose strict minimum income requirements.

Unlike when you check for prequalification, Prosper will conduct a hard credit pull when you submit an application. This can temporarily lower your credit score by a few points and remain on your report for up to two years.

Fees

  • Origination fee: 1% to 9.99% of the loan amount, taken from the loan proceeds
  • APR: From 8.99% (as of 07/01/24)
  • Late fee: The greater of $15 or 5% of the unpaid amount if not paid within 15 days of the due date
  • Insufficient funds fee: $15 if you make a payment and there’s not enough in your bank account to cover the full amount (does not replace late fees)
  • Check payment fee: The lesser of 5% or $5 if paying by check
  • Prepayment penalty fee: None (most lenders do not charge these for personal loans)

Like most lenders, Prosper deducts origination fees from loan proceeds, so be sure to factor this into the amount you borrow.

Home equity lines of credit (HELOCs)

While they aren't available in all states, you may be eligible for a home equity line of credit, or HELOC, from Prosper. This is a secured credit line that is based on the value of the equity in your home. Unlike a personal loan that pays you a lump sum, a HELOC offers access to funds up to a maximum draw amount for a period of time, such as 10 years. HELOCs are best for long-term projects rather than a one-time expense.

  • APR: 7.90% to 21%, or the maximum allowed by law
  • Borrowing limits: Up to 80% to 90% of the home value of your primary home, up to 80% of the value of a secondary home
  • Fees: No annual fee the first year, then $50 per year during the remaining Draw Period

What Prosper customers are saying

Reviews about Prosper loans are very mixed, depending on where you look. The company’s average rating is 4.6 out of 5 stars on Trustpilot, based on over 13,000 reviews. This is very high for a lender or financial institution in general.

Positive comments on Trustpilot center around reliability and the fast and uncomplicated borrowing process. Here’s a telling review that sums it up well:

Prosper TrustPilot Review

However, some negative commenters felt misled by the company or were frustrated that they received marketing materials but weren’t approved for loans when they applied. The platform has a dismal 1-star customer rating with the Better Business Bureau, but many reviewers talk about credit cards rather than personal loans, and many who do speak about loans didn’t make it past applying.

Alternatives to Prosper

SoFi

If you’re looking for a personal loan with no fees, SoFi may be the right lender for you. It offers similar perks to a Prosper personal loan, such as a quick online application and potentially low rates, but with additional benefits like an autopay and direct pay discount, no late fees, and higher borrowing limits.

  • APR: 8.99%-29.99% (as of 09/05/24), with autopay and direct deposit discounts
  • Minimum credit score: 680 (recommended)
  • Loan amounts: $5,000 to $100,000
  • Loan terms: 2 to 7 years
  • Origination fee: Not required, but you may negotiate a lower rate if you opt to pay an origination fee

Although SoFi wins out over Prosper in terms of fees and rates, SoFi has much stricter credit score requirements — you may need a 680 or above to qualify. Plus, if you need a smaller loan amount, Prosper is a better option as its loans start at $2,000, while SoFi’s start at $5,000.

Compare Personal Loan Rates in Minutes

Get matched to lending partners and shop rates to find the best one for you.

Get your rate

Upgrade

Another alternative to Prosper is Upgrade. You can borrow a smaller amount (loans start at $1,000) at comparable interest rates, but you’ll pay a higher origination fee on the lowest end.

  • APR: 9.99%-35.99% (as of 8/19/24)
  • Minimum credit score: 580
  • Loan amounts: $1,000 to $50,000
  • Loan terms: 2 to 7 years
  • Origination fee: 1.85% to 9.99%

Upgrade offers similar loan terms to Prosper’s and is known for accepting borrowers with fair or even poor credit. I’d recommend this lender over Prosper for those with weaker credit profiles. Upgrade is also unique for offering secured personal loans that let you use a car as collateral.

Both Upgrade and Prosper allow joint applications, so if you add a reliable co-borrower with a stronger credit profile, your approval odds for a loan or more favorable loan terms can increase.

Upgrade

Learn More

FAQs

Can you pay off Prosper loan early?

Yes. Prosper allows you to pay off your loan before its due date and will not charge you any prepayment fees if you choose to do so. Most personal loans no longer charge prepayment fees.

Does Prosper call your employer?

As part of its verification process, Prosper may contact your employer to ensure you have the income you claim on your loan application. Generally, they will request documentation to verify income, such as pay stubs, tax returns, bank statements, etc.

They may also search databases to confirm your income. However, they reserve the right to contact your employer directly, as well.

How many Prosper loans can I have?

Eligible borrowers can receive up to a maximum of $50,000, which can be divided between two loans. Prosper recommends at least six months of on-time, consecutive payments on your first loan before applying to be eligible for an additional loan.

How does Prosper make money?

Part of Prosper’s revenue comes from WebBank in exchange for bringing them customers they can make loans to. Prosper earns a transaction fee ranging from 1% to 9.99% from WebBank.

Prosper also makes money from collecting servicing fees from investors. For investors, Prosper charges a 1% annual loan servicing fee that’s applied to the outstanding balances of loans the investor has funded.

Is Prosper FDIC insured?

Prosper is not FDIC-insured because it is not a banking platform but a peer-to-peer lending marketplace that allows investors to offer up funds for others to borrow.

Investor funds are deposited into an account with Wells Fargo Bank, which is an FDIC member. Investor deposits are protected up to the amount allowed by FDIC insurance. However, Prosper also advises that other funds an investor may have deposited in another Wells Fargo account, such as a checking account, may count toward FDIC limitations.

All Prosper loans are originated by WebBank, a Utah-based industrial bank that is an FDIC member. After WebBank establishes a loan, Prosper will purchase it and then sell it to investors.

Bottom line

Though Prosper was the first peer-to-peer lending marketplace in the U.S., it has little to differentiate it from its competitors. Borrowing with Prosper is pretty straightforward, and you’re not likely to really notice that you’re borrowing from a peer-to-peer marketplace versus a traditional lender when applying.

Prosper charges origination fees, which is common for personal loans, though finding loans without them is possible. However, Prosper also offers relatively low interest rates and a decent range of loan amounts and terms. Still, it’s worth checking to see if you prequalify with a few lenders before choosing one to know where you might get the best rates and terms.

Lending by peers instead of a banking institution
Available in most states
Lower minimum APRs than many lenders
Joint applications accepted